Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what assessment she has made of the potential merits of reducing the taper rate of Universal Credit.

The Government has consistently said that the best way to support people’s living standards is through good work, better skills, and higher wages. We want people to see their income increase when they start working or earn more, so we reduce their Universal Credit award by less than they are earning.

These policies are kept under regular review with the most recent changes announced at the Autumn Budget 2021 when decisive action was taken to make work pay by cutting the Universal Credit taper rate from 63% to 55%, meaning that claimants will keep more of their earnings. We also increased the Work Allowance by £500 a year, this is the amount that households with children or a household member with limited capability for work can earn before their Universal Credit award starts to be tapered, meaning many claimants will be able to earn over £550 each month before their Universal Credit begins to be reduced.

These two measures mean 1.7m households will keep on average, around an extra £1,000 a year. These changes represent an effective tax cut for low income working households in receipt of Universal Credit worth £1.9 billion a year in 2022-23. They will allow working households to keep more of what they earn and strengthen incentives to move into and progress in work.